How to attract funds for storage investments? • Andrea Stegher • GSE Vice-President & • Chairman of Security of Supply and Investment WG • GIE Annual Conference 2008 • Bucharest, 24 October 2008
Agenda • The GSE Investment Database: updated figures • Financing storage projects • The financial crisis and possible impacts on storage developments • How to attract funds for storage investments • Conclusions
The GSE Investments Database • Database of EU storage investments was launched in July 2007: • Publicly available information • Projects divided into 3 categories: planned, committed and under construction • Updated regularly • From an initial 30 bcm WG capacity increase to 2015 (July 2007) to around 60 bcm (October 2008) • Grand total of around 110 projects • “Independents”/new players are increasing their role: 25% of projects and 30% of planned new capacity (~ 19 bcm) • A powerful and transparent instrument to evaluate storage supply perspectives.
Storage Investments: GSE internal survey • Results of a 2006 internal survey conducted among GSE members showed that nearly all respondents were satisfied or very satisfied with financing the investment
Storage investments: which impacts from the financial crisis • Is the 2006 result still true ? • Possibly too early to draw conclusions on real consequences, but analysis could be conducted on two different aspects: • Direct: restricting financing opportunities for new ventures (addressing mainly independent players ?) • Short term impact: delay of planned projects • Selling development options to “more robust” players • A possibly “positive” side of the story: reduction in cushion gas prices • Indirect: revision of gas consumption and storage need estimates • Long term impact: reassessment of storage future demand
How to attract funds for storage investments • Possible title reformulation: “How to keep funds in storage investments” • Issue is: how storage is looked at in a more volatile world ? • Two features of storage projects could provide the key to making funds available (on time): • To serve clients • New capacities should rely on a solid client base: if product is “right”, investment should be fine • To contribute to SOS • New gas flows come from further away and could be “diverted” (e.g. LNG world competition) • In some areas we could nonetheless see some projects disappear
…considers GGPSSO a guarantee for equal treatment of storage users & positive investment signals …reaffirms its commitment to the full implementation of GGPSSO …does not believe in unnecessary administrative & regulatory burdens …is committed to promoting a clear & stable investment climate fostering new ventures …believes that binding regulation, if implemented, must remain in the scope of GGPSSO …strives for the realisation of a competitive internal gas market GSE beliefs for preserving a sound investment climate for storage Regulatory framework Access and transparency Market investments